7 Reasons to Go Independent as a Financial Advisor

Breaking out on your own as an independent advisor can offer many benefits, though it doesn’t always take the same form. Among advisors considering independence, 44% say they would most likely join or affiliate themselves with an existing registered independent advisor (RIA), while 31% said they’d establish a firm of their own, according to a 2024 Schwab Supported Independence Study. ¹ Exploring the advantages of going independent can shed light on whether it’s a career path you may want to consider.

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Benefits of Becoming an Independent Advisor

A desire to transition to independence is often motivated by a range of factors. Making the leap may feel intimidating, but independent advisors enjoy a multitude of advantages.

1. Increased Flexibility

Running an independent practice can allow advisors to set their own schedules, giving them the freedom to balance their work and personal life in a way that best suits their needs. That can lead to increased job satisfaction and overall well-being, as the structures and demands of larger institutions do not bind advisors. It can also open up time to pursue continuing education and professional development opportunities.

Moreover, personal flexibility enables advisors to choose the clients they work with, enabling them to build a client base that aligns with their professional interests and values. This can result in more meaningful and fulfilling client relationships, as advisors can provide personalized, high-quality service without the pressure to meet corporate quotas or push specific products. Among advisors considering independence, 98% expressed a desire to have the freedom to do what’s best for their clients, according to the Schwab study.

2. Ownership and Control

Starting your own firm positions you to own and control your business, which is a significant incentive for many professionals in the field. Ownership provides the opportunity to make independent decisions about the direction and operations of the business, enabling advisors to implement their vision and strategies without external interference. 

In the Schwab study, 60% of advisors said they wanted more control over fees and pricing, while 42% wanted the ability to offer a broader range of services. Additionally, 41% cited control over marketing and sales as a reason for wanting to go independent.

Owning a business could also offer financial rewards that can surpass those of working for a larger firm. Independent advisors, for example, can reinvest profits back into their business, which can lead to additional growth and a more robust, competitive practice over time.

3. Increased Earning Potential

Independent advisors can set their own fee structures, which may include charging hourly rates, fixed fees or asset-based fees. This flexibility could also allow them to optimize revenue streams based on the services and value they offer clients. Plus, by not having to share profits with an institution, advisors can retain a larger portion of their earnings.

Moreover, owning a firm can also open up other revenue opportunities to diversify income. For example, an independent advisor could expand services to include tax planning, estate planning and insurance products. By doing so, you can generate additional revenue streams beyond standard investment management, and offer more comprehensive solutions to clients while securing more consistent income and growth opportunities for your business.

4. Chance to Build Something Meaningful

Working as an independent advisor can allow you to focus on business that reflects your values, goals and vision. This can guide you in building the foundation for a meaningful business. For example, if you’re committed to sustainable investing, you can choose to build a practice focused on advising clients who are interested in ethical and socially responsible investments. 

Your principles can become the core of your business, driving you to develop innovative solutions to meet specific client needs. In the Schwab study, 47% of advisors expressed a desire to build value in their business over the long-term through independence. Developing a unique value proposition to attract your ideal clients and expand your footprint within your chosen niche is possible when you pursue independence.

5. Decision-Making Without Restrictions

Independent advisors can select a greater variety of products and services to meet their clients’ needs, which otherwise could be limited or influenced by the corporate policies or sales targets of working in a larger firm. For example, 44% of advisors in the Schwab study said they considered independence so they could offer more personalized services to their clients.

Having the ability to set your own business strategy means that you can implement your own vision for your business, including marketing approaches, client engagement strategies and operational processes. This control can also position you to respond to market changes and client feedback, maintaining services that are relevant and competitive.

6. You Create the Culture

For some financial advisors, the structure and culture of a large firm can feel restrictive. If that’s your perspective, then becoming an independent advisor may be a better cultural fit for you.

For example, an independent advisor can recommend a wide range of investment options, including niche or boutique funds that advisors at larger firms may have to avoid, as they could be restricted to promoting only in-house or approved products. 

Another example is that an independent advisor could structure fees to align with client preferences, such as offering flat fees or hourly rates, whereas advisors at larger firms might be required to follow a standard commission-based structure.

7. Less Pressure, More Focus on Clients

Independent advisors can set business goals at their own pace, while advisors at larger firms may be required to meet quarterly or annual sales quotas. Without this corporate pressure, you could have greater opportunities to concentrate on individual client needs. 

For example, you may be better positioned to customize a retirement plan for a client that’s tailored to their needs than an advisor in a firm who must be mindful of sales targets or proprietary products.

8. Higher Ethical Standards

Some advisors choose to go independent so that they may offer a higher standard of service to clients in a fiduciary capacity. Forty-two percent of advisors polled by Schwab cited taking on a fiduciary role as a reason to consider independence.

Being held to a fiduciary standard means you prioritize clients’ interests, goals and needs over your own. That could offer an advantage as you market your firm to attract new clients. Prospects may feel more comfortable working with an advisor who they know is bound to a high ethical standard, versus a broker-dealer who is subject to a suitability standard only.

9. Build a Legacy

Going independent is an opportunity to create a lasting legacy that you can eventually pass on to a trusted successor. You can control when and how you make your exit, whether that means leaving the business to a junior employee, passing it on to a family member or overseeing its acquisition by another independent firm.

It’s up to you to decide what succession planning for the business you’ve built should look like. You don’t have to worry about being pushed into early retirement or downsized out of a job. And if you’ve worked diligently to build a respected brand, your legacy can continue long after you’re out of the picture.

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Bottom Line

Going independent as a financial advisor can offer you many advantages, from flexibility and financial rewards to the opportunity for building a meaningful and client-focused practice. By owning your own firm, you can break free from the constraints of larger institutions, make autonomous decisions and foster deeper, trust-based relationships with clients.

Tips for Managing Your Advisory Business

• Pre-screen for prospects that meet your client profile. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
• Get a head start on creating a succession plan. Even if you’re a new financial advisor, it’s still important to think about how you’ll manage retirement when the time comes. Succession planning can take years to complete, so getting an early start can help ensure a smooth transition when you’re ready to step away from the business you’ve built.

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